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The Construction Industry and Brexit

May 04, 2016

The EU referendum is one of those topics that everyone has an opinion on because leaving the EU will have significant effects on the way business is done in Britain.
What would the affect be on the construction industry if the UK voted to go solo and how would it impinge our day-to-day business?

Access to labour is the first major issue as, without it, the construction industry would be unable to operate as the industry relies extensively on foreign workers to fill both skilled and non-skilled job roles, as it always has done.

A fundamental principle of the EU is the right of free movement, which makes immigration between member states relatively easy and stress-free. As an industry, construction appears broadly supportive of migration. In 2014, in a poll conducted by Building Magazine indicated that while opinions vary widely, those in construction appear broadly positive on migration and migrants. In a 2008 House of Lords Economic Affairs Committee report, both employers and unions argued the case of migrant workers.

An EU departure would mean that foreign workers would find immigration to the UK much more difficult. It's likely that those skilled individuals would travel to other more attractive EU member states, such as France or Germany, where the right of free movement would remain.

Those in favour of Brexit contend that allowing other EU nationals the right to work in the UK restricts jobs for British people to access. Due to the demands of the construction industry however, there is simply not enough skilled or unskilled British workers. A report published by the Chartered Institute of Building (CIOB) estimated that 9.6% of construction workers in 2011 were born outside the British Isles.

In addition to the freedom of movement, the EU embraces the principle of the free movement of goods which eliminates customs duties and quantitative restrictions. Like any other industry in the UK, construction benefits from this principle. In 2010, the Department for Business Skills and Innovation estimated that around 64% of all building materials were imported to the UK from the EU. Not only that, but the same report estimated that 63% of our construction material exports were to the EU.

Whilst a vote to leave ends ludicrously high membership fees for Britain, importers and exporters face potentially crippling duties or limits on quantities to allow British firms to sell goods and services to EU countries which will mean a shortage of materials in the UK, or that it will simply be more expensive to procure materials that the industry requires.

In light of the above, is it fair to conclude, that from a business perspective, Brexit should be overruled?

About the author

Charlotte Barker

Charlotte joined Nockolds in 2015 and is a Senior Associate Construction Solicitor in our Commercial Property Team. Charlotte graduated from the University of Hertfordshire and was ...

Nockolds Solicitors Limited is authorised and regulated by the Solicitors Regulation Authority (”SRA”) (ID numbers 567738 & 605527). A copy of the SRA’s rules can be found at www.sra.org.uk/solicitors/handbook/code.